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The importance of having an ethical supply chain

A recent Accenture Strategy survey of nearly 30,000 consumers in 35 countries found that more than half of UK customers “want companies to take a stand on issues they care about such as sustainability, transparency and fair employment practices.”

In today’s world consumers expect products that are safe, sustainable, and responsibly sourced.  They want to buy and connect with brands who care about the products and services that they offer; who value the importance of an ethical supply chain that will incorporate social and human rights together with environmental considerations into how they do business across the world.  To deliver on these expectations and secure consumer trust, businesses must ensure their supply chains are wholly transparent.

An ethical supply chain focuses on the need for corporate social responsibility, working to produce products and services in a way that treats its workers and the environment, ethically.  The pressure is mounting from all sides: NGOs, investors, governments, and consumers are all demanding more from retailers and brands.

Segura was founded in 2012 to combine digital expertise with detailed knowledge of global supply chains, in order to create a simple-to-use business solution. They deliver market leading solutions to retailers, focused on helping them to achieve ethical, sustainable and compliant multi-tiered supply chains through automatic supplier onboarding, mapping and reporting.

Peter Needle, Founder and President at Segura says that “our aim is that one day every product will come with provenance: accessible, trustworthy information about origin, journey and impact.  We want to empower shoppers to drive progress through their purchasing power and at the same time, generate rewards for brands making a positive impact on people and planet.”

Retailers have spent decades working on their supplier relationships. However, most of their focus has been on making apparel at the right price and ever faster – typically by increasing the number of suppliers. In a competitive marketplace, failure to respond to consumer demands can be catastrophic. But retailers have moved from dealing with a small number of large apparel manufacturers close to home, to a vast array of suppliers all over the globe.

Many solutions have sprung up over recent years, to try and help brands have more visibility and control over their suppliers. However, these companies don’t always offer the complete package and very often falter after the first tier of interrogations.

Peter believes that it is important to start with a central ‘top down’ system.  “The Segura platform has the capacity to map and validate all suppliers through multiple tiers, capture their supplier compliance and standards information, verify this by linking to audit and certification partners, and to draw in data from bottom-up tracking and other vertical systems.

“Once you have visibility in both breadth and depth over your supply chain, you can also target measures that will improve performance.  Observing the buying patterns of your suppliers will help you identify and tackle the many inefficiencies that exist. The savings made in this area can be ploughed back into your suppliers in exchange for improvements in their ethical and sustainability performance.”

Segura’s view is that any business should first adopt a central, top-down platform to map out all suppliers through multiple tiers, validate the suppliers , and provide advanced reporting, acting as the collaboration and control system. Once it has been embedded, other specialist solutions can be onboarded, and their value greatly leveraged. Peter believes that “tracking the orders cannot be underestimated, it gives suppliers fewer opportunities to use unwanted third parties, or factories in lower tiers that may be sub-standard.”

Segura is the only solution on the market with an order capture and validation function, their software platform provides a 360-degree view of every supplier within their clients supply chain.  The platform enables sustainable and ethical sourcing through multi-tier supplier mapping, compliance and reporting, providing retailers with the assurance that each product, and everything in it, has been made in good quality, ethical factories.

Hobbs, the premium British womenswear brand is the most recent TFG fashion brand to sign up with Segura, helping them to capture and map their supply chain by order, validating their suppliers as compliant with TFGs’ CSR standards.

“We are very proud to have successfully gone live with Whistles, Hobbs, River Island and a number of iconic brands so far and are moving forward with a number of other high-profile retailers” says Peter. “It’s confirmation that our knowledge and expertise delivers transparency and compliance for retailers, so that they can be sure that their suppliers are both sustainable and ethical.”

In conclusion, the landscape of supplier sourcing is changing rapidly and the demand to bring more visibility, control and accountability to retailers and brands is constantly growing.  Consumer demand has spoken, and they will not accept a brand without full supplier transparency.

Environmental supply chain risks to cost companies $120 billion by 2026

Companies face up to $120 billion in costs from environmental risks in their supply chains by 2026, according to new research released today by CDP.

The report, Transparency to Transformation: A Chain Reaction, analyses data from 8,000+ supplier companies disclosing to their corporate customers via CDP in 2020 and finds a combined $120 billion of increased costs among those companies alone within the next five years from environmental risks.

The sectors that report the most potential cost increase are manufacturing (US$64 billion), food, beverage & agriculture (US$17 billion), and power generation (US$11 billion).  

Due to most supply chains running on very tight profit margins, increased costs are expected to be passed up the chain in a domino effect to their buyers. In turn, these companies are likely to pass the cost onto consumers. 

Sonya Bhonsle, Global Head of Value Chains at CDP, said: “With US$120 billion at stake, addressing environmental risks through supply chain engagement is vital for companies to be competitive and resilient in the changing market. Leading companies that address these risks will benefit from lower costs and better reputations. This gives them a more competitive edge today and helps them become more resilient for the economy of tomorrow. Meanwhile, laggard companies risk being left behind. As the climate and ecological crisis worsens and the economy shifts, it’s essential for both business and society that we have a Green Recovery from COVID-19 and build back better. Smart business procurement is key to that transition.”

The environmental risks causing cost increases stem from climate change, deforestation and water-related impacts. These cover physical impacts, for example increased severity and frequency of cyclones and floods, increased cost of raw materials; and regulatory and market changes as the world addresses environmental crises, such as carbon pricing and increased spending on product innovation due to changing customer demands.

Corporate buyers could be impacted by this looming cost increase. To address this risk, increasingly buyers are demanding transparency and action from their suppliers to tackle environmental impacts in their supply chains. These include 150+ major buyers with over US$4.3 trillion in purchasing spend, such as Google, L’Oréal, Walmart, Braskem and Toyota. As CDP supply chain members, they request thousands of their key suppliers to disclose their environmental data through CDP each year and use this data in their procurement decisions and supplier engagement.

Other key findings from the report include:

  • Supply chain GHG emissions are 11.4 times as high as operational emissions on average. This is over twice as high as previous estimates, due to more comprehensive emissions data. 
  • The ratio varies drastically by sector: E.g., in retail, supply chain emissions are 28 times as high as operational emissions.
  • The number of supplier companies disclosing data has increased from almost 7,000 to over 8,000 in 2020, despite the disruption from COVID-19 (a 16% increase) 
  • Suppliers undertook activities that cut emissions by 619 million metric tons of C02e in the last year and saved US$33.7 billionin the process. This is equivalent to emissions from 159 coal power plants running for a year [1]
  • However, climate action is not yet cascading through the supply chain as needed: only 37% of suppliers are engaging their own suppliers to cut emissions. 

The demand from big corporate buyers for their suppliers to be transparent on environmental impacts and take action to address them is growing, despite the pressures from COVID-19. In 2020, the number of buyers requesting disclosure through CDP’s system grew by 24% and they collectively requested data from 15,600+ suppliers, a 19% increase on the last year. In part this increase in market demand has been driven by the large companies increasingly setting science-based targets, which usually require them to cut their supply chain (Scope 3) emissions. Achieving their targets depends on engaging their suppliers.

75% of shoppers ‘will boycott grocery brands’ over environmental concerns

Over three-quarters (77%) of UK grocery shoppers have, in the last 12 months, switched, avoided or boycotted buying certain products, or would consider doing so in the future, based on brands’ environmental policies.

Kantar questioned over 1,200 UK consumers between the ages of 16 and 65+ about their concern over a range of environmental issues, their purchasing decisions based on a brand’s sustainability credentials, environmental responsibility  and whether, as a consumer, they had ever decided to boycott buying a product or switch to another brand based on its environmental reputation. 

Brand loyalty is lowest among the youngest age group of 16-24 year-olds with 87% saying they have switched or might do so, with more males (24%) switching or boycotting brands than females (18%).

Responses differ considerably among generations too, with 40% of Millennials saying they have avoided buying, or decided to choose a different brand over the last 12 months, compared to only 9% of Baby Boomers. However almost half (46%) of this generation of 55-65+ year-olds indicated that while they hadn’t switched or boycotted brands in the last year because of their environmental credentials, they might consider doing so in the future – the highest among all age groups.

Harsh working conditions, environmental pollution and the overuse of packaging are some of the issues consumers think carefully about before purchasing FMCG products. 

Much needs to be done by the FMCG industry when it comes to publicising the positive work it is doing to address the environmental problems resulting from the throw-away, disposable culture we live in today, say 76% of consumers. This sentiment is high across all regions (>73%) with shoppers in the northwest of England (80%) agreeing followed by Greater London (78%). Only 9% considered this issue unimportant.

Mark Chamberlain, managing director of Brand, Kantar UK, said: “Responsible living is being driven by cross-generational groups of ‘woke’ consumers that look towards inspiring brand heroes as change leaders. Governments and organisations are being forced to listen and respond to consumers’ demands for greater transparency as businesses strive to become more purposeful.”

Almost 90% of respondents surveyed agree that brands need to take more responsibility for the waste they produce and the impact it this has on our environment. This sentiment was high across all age groups (>82%) but highest among those aged 65 and over (92%).

Three-quarters of shoppers agree that, due to inaction from many of the world’s governments, they want brands to act as forces for positive change in our society. However, when questioned about their response, over 70% of all consumers agreed that efforts by businesses to protect the environment are ‘too little, too late’, with younger generations of Millennials agreeing most with this statement (78%).

Environmental concerns

Consumers ranked global warming as their number one environmental concern (25%), followed by the overuse of plastic and other forms of packaging (18%) and then deforestation and the loss of biodiversity (14%). They appeared less concerned about the depletion of the ozone layer (4%), extraction of fossil fuels from the earth and natural resource depletion (5%), overfishing of our seas (6%) and household/industrial waste (8%).

These and many other of today’s environmental issues are caused, in part, by a lack of responsibility taken by some of the world’s leading brands, say 83% of consumers; a sentiment expressed most among 25-34-year-olds (88%).

Chamberlain added: “The rise in responsibility and conscious consumerism is being influenced by a top-down approach as the consumer voice grows and pushes forward environmental and social agendas.

“Consumers now expect the FMCG industry to be driven by some direction other than simply making a profit. These values are fast becoming key assets in helping boost brand value whilst projecting a positive corporate image, and by doing so businesses can demonstrate a clear sense of purpose. This is what consumers are now looking for in today’s brands, and this preference will only intensify as the next generation comes of age. Purpose-led FMCG brands enjoy stronger growth and a deeper connection with consumers.”

The study says UK brand Divine Chocolate  is an  FMCG brand that has earned greater trust from consumers due to its commitment to becoming more transparent and respect for the environment. While Waitrose has committed to no plastic and glitter in its Christmas crackers in 2020, Tesco has stopped using plastic bags for home deliveries and Morrisons now allows customers to use their own reusable containers at their meat, fish and cheese counters.

Kantar says the most-loved brands will be those that attempt to achieve a zero-carbon footprint by re-thinking operations and finding solutions that are fully sustainable both for the environment and the business bottom line.

Other key trends:

  • Plastic problem – Over half (53%) of consumers rank the overuse of plastic and other types of packaging as one of their top three environmental concerns. More women than men are concerned about it (58% v 49%), with 45-64 year-olds expressing most concern across all age groups (60%).
  • Buying decisions – 82% of 25-34 year-olds say they sometimes or always check a brand’s commitment towards sustainability, the environment and saving the planet before making a purchase.
  • Taking responsibility – Almost 90% of consumers agree that brands need to take more responsibility for the waste their products create and the impact it has on the environment, with 50% ‘strongly agreeing’. This sentiment is strong across all age groups (>82%) and is highest among the 65+ cohort (92%).
  • Younger generations – Those most concerned with the issue of global warming are 16-24 year-olds, the youngest age group overall, with 65% ranking it as one of their top three concerns; of those, over one-third said it was their number one concern. 
  • Boycotting brands – 76% of consumers said they had boycotted buying certain clothes, had switched brands in the last 12 months or were thinking of doing so because of a brand’s environmental policies.

Living the dream: How changing your pallet choice could save money AND the environment

By Pallite

Transit packaging that does the job you need it to do while saving you money and safeguarding the environment may sound like a dream that’s too good to be true, but one company has had more success than most turning that dream into a reality.

PALLITE’s lightweight yet strong, paper-based packaging products – including pallets, pallet boxes, layer pads and warehouse storage solutions – are made from sustainably-sourced materials and 100% recyclable after use. They contribute less to climate change and the disappearance of the world’s rainforests than wooden pallets, and result in reduced CO2 emissions and total cost of distribution for businesses that choose to use them.

There is a growing movement away from traditional wooden pallets towards alternatives like PALLITE. But many of these come with limitations or drawbacks – something that PALLITE strives to avoid.

“We were clear from the start that our products had to offer a credible alternative to wood, meaning they were strong enough to handle the kind of jobs customers routinely require,” explains PALLITE CEO Iain Hulmes. “It didn’t make sense to us to offer products that only a small proportion of businesses could actually use.

“You wouldn’t think something made from just paper and PVA glue, that weighs under 5kg itself and can be engineered to carry 1 tonne with ease. The fact a standard PALLITE pallet can do this, and hold up to 750kg in open-beam racking, is testament to the many design hours invested to create a product range that is truly innovative.” 

Thanks to the honeycomb-cell technology used in their design, PALLITE pallets are stronger than cardboard equivalents, and bespoke versions have been manufactured for customers allowing them to hold much more than the figures Holmes quotes.

This strength, together with a weight saving of around 20kg on their wooden counterparts, makes PALLITE pallets a cost-effective, environmentally-friendly choice for businesses large and small across a wide range of industries, whether they are transporting goods by land, air or sea. Even if businesses have very specific requirements that mean they can’t use PALLITE for all their transportation needs, switching to PALLITE for the journeys they can delivers significant benefits. These include reduced fuel costs when travelling by road, cheaper air freight, and lower CO2 emissions across the board.

What’s more, the entire PALLITE range contains no nails and does not splinter. It also has a higher resistance to mould than wooden pallets. These factors make PALLITE an ideal choice for use in the food and pharmaceutical industries, as well as reduce the risk of manual handling injuries in the workplace.

The PALLITE range is readily available and can be tailored to customers’ requirements. For more information, call 01933 283920 or email enquiries@pallite.co.uk.

GUEST BLOG: Enforcing packaging standards delivers ethical and financial value

Switched on brands are becoming ever more aware of the importance of packaging when it comes to consumer experience. Far too few, however, have yet to address the extraordinary packaging inefficiencies that exist throughout the supply chain.

Where is the consistency in packaging types -both material and size – that can not only enforce sustainability and ethical standards but also enable cost saving optimisation of pallets, containers and warehouse space?

David Griffiths, Product Marketing Manager, Adjuno, outlines the value of enforcing robust packaging standards across the global supply chain…

Packing, Shipping and Storing Air

Minimalist packaging may be the new black when it comes to consumer facing goods, but across the supply chain the situation is far from slick. When some retailers are handling thousands of different packaging types from suppliers globally, the implications on cost, sustainability and efficiency are very significant.

Given the risk of product damage associated with packaging that is too small, many suppliers will err on the large side – but the costs of this approach, both direct and indirect, are considerable. In addition to wasting money on unnecessary material, what about the wasted space? With multiple sizes used, pallets are not optimised, nor are containers; while oversized packaging also impacts the number of items that can be stored in the warehouse or distribution centre (DC), or in-store. Packing, shipping and storing air is an expensive business. Add in the cost of ethically disposing of damaged or unusable packaging, and reconsidering this area should be about far more than the consumer facing experience.

Plugging the Leak

With the rising pressure on costs and growing stakeholder expectations regarding ethical business practice, retailers need to take control and plug the financial leaks across the supply chain associated with packaging inefficiency. And that means defining and, critically, enforcing very clear packaging standards on suppliers.

Just consider the supply chain implications of reducing packaging types from thousands, even hundreds, to just a dozen – from the material consistency that transforms recycling and waste disposal activity to the optimisation of shipping and storage. And the financial returns that can be achieved by creating packaging standards across the world are significant – from a typical 5% to 10% reduction in the amount of packaging material being used to an improvement in container utilisation of 5% – 15%. The return on investment is compelling – and quick.

Enforcing Control

The starting point must be a robust review of requirements: what are the packaging requirements of the product? What are the space restrictions in the DC? What can containers handle? And what are the feasible packaging types that can be enforced? The challenge, however, is not simply to create these standards but to ensure they are enforced globally. Going through the exercise of rationalising packaging is great but fail to robustly enforce the standards and suppliers will rapidly revert back to using all various shapes and sizes.

Compliance is key – and that means ensuring a retailer has excellent visibility of the supplier’s packaging plans. The easiest approach is to automatically accept orders packed using the authorised sizes and materials. If a supplier cannot access approved packaging for some justifiable reason, retailers can also offer a short list of acceptable sizes – while also ensuring the substitution is automatically communicated. The big win is to have immediate visibility when a supplier proposes the use of unauthorised packaging – enabling a retailer to accept or reject an order based on the potential financial (and ethical) implications of failing to follow the defined standards.

It’s not just retailers that need visibility. In order to inspire suppliers to stick to the rules, they need to be easy to find as well as adhere to. Suppliers need to have excellent visibility of the retailers requirements in order to quickly locate the right type of packaging and keep the process running as efficiently as possible.

Conclusion

This is a massive mindset shift – and one that will be increasingly considered not just at the time of each shipment but during supplier assessment. In a world where packaging is fast becoming a key component of sustainable and ethical business, a supplier’s commitment to the use of standardised packaging must become a fundamental component of the decision making process.

Minimalist packaging is indeed the new black – from supplier all the way through to consumer.

Up the revolution, says AXIT

The digital revolution is making supply chains greener – That’s the finding of the IT experts at AXIT, a Siemens company.

The ‘Green Paper’ published by the cloud specialist examines the effects of the digital revolution on logistical processes from various perspectives.

The assessment is based on the control of supply chains using AX4. The cloud-based IT platform integrates all the relevant parties in a logistics network – manufacturers, suppliers, service partners, etc. – to ensure smooth, cross-enterprise collaboration and end-to-end visibility of goods in transit.

“It’s possible to plan transports proactively and optimise the utilisation of capacities. This leads to fewer empty trucks running, which lowers CO2 emissions,” said Christian Wendt, Head of Marketing at AXIT. “Using a platform solution that connects all logistics partners also makes it much easier to integrate environmentally friendly modes of transport such as trains and barges.”

The Green Paper from AXIT provides the insights into the latest key issues of green logistics in the digital age. The various sections focus on different options that users have for deploying AX4 in the digital supply chain. Whether it’s reducing traffic at logistics hubs, making better use of transport capacities, or using less paper in the processing of orders. “Green logistics is becoming the model of success in the digital world,” added Wendt.

The AXIT Green Paper ‘Using the digital supply chain to achieve environmentally friendly, cost-efficient logistical processes’ can be downloaded for free at www.axit.de/en/green-paper.